Lower Macungie commissioners have approved an agreement to apply for and sponsor $2.75 million worth of state grants that would help fund a planned Costco-anchored shopping center.

The board on Thursday night unanimously approved an agreement with the developers of the planned $140 million Hamilton Crossings shopping center to serve as the public applicant for grants from the state's Redevelopment Assistance Capital Program.

The money will be used for remediation and/or development of the property at the Route 222 bypass and Krocks Road if the project ultimately moves forward. The developer plans to bring a Whole Foods and Target to the shopping center.

The developers — the Goldenberg Group of Montgomery County and Tim Harrison of Staten Island, N.Y. — hit a snag earlier this year when Lehigh County commissioners rejected a plan that would have allowed the project to benefit from tax increment financing, an arrangement under which tax revenues from the shopping center would be used to finance the project.

The developers had said they would walk away from the project if the county commissioners did not approve the TIF along with the East Penn School Board and Lower Macungie commissioners. But they're still holding out hope that they can make it happen.

Jeremy Fogel of the Goldenberg Group has indicated that the developers would "try to work to identify a solution so we can move forward."

There's been talk that Lehigh County commissioners may discuss the TIF proposal again as soon as this month.

Lower Macungie commissioners, who have voiced their support for the project, said that the grant funding would go back to the state if the shopping center isn't developed.

The cooperation agreement indicates that the township has received noticed from the Governor's Office of the Budget that two grants -- one for $2.5 million and the other for $250,000 -- have been approved. But the developers needed a public agency to serve as the applicant for the money.

The developers have been seeking tax financing because of rising costs of the project caused in part by what they call "extremely significant" geologic issues created by previous mining activities on the property.

Under the TIF proposal, up to $7 million in the development's future property taxes would be used to finance the project. The amount of tax dollars used would hit as much as $14 million when factoring in interest on bonds that would be used to fund the project.

The TIF proposal projected that the shopping center, once built, would generate $590,872 annually for the East Penn School District and $135,000 annually for Lehigh County in its first 20 years, amounts that represented half of the property taxes paid. That would be money the taxing bodies would keep. After 20 years, the school district and county would have reaped 100 percent of those taxes.

The developers have said the shopping center would create 920 jobs -- 619 full-time and 301 part-time.

They also are awaiting approval of a $6.4 million Pennsylvania transportation grant.

In addition, Lower Macungie commissioners earlier this year applied for a $1.5 million grant for water and sewer improvements at the development. Township officials said the developers would have to provide a $1.5 million match to the grant if it is approved

Township commissioners also have said they would consider waiving an estimated $2.8 million in traffic impact fees that the developers would have to pay for the project.